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Aeropostale (NYSE:ARO) is a specialty retailer that sells casual apparel and accessories targeted primarily at youth aged 14-17. Its primary competitors include American Eagle (NYSE:AEO), Abercrombie & Fitch (NYSE:ANF), Gap (NYSE:GPS), J.Crew Group (JCG) and Urban Outfitters (NASDAQ:URBN). We currently have a Trefis price estimate of $55 for Aeropostale’s stock.

Trefis members have created forecasts for two key drivers of Aeropostale’s stock over the last week: (1) Aeropostale Stores EBITDA Margin and (2) Aeropostale Revenue per Square Foot. The members’ forecast suggest that Aeropostale Stores EBITDA Margin will trend lower than the Trefis forecast, while Aeropostale Revenue per Square Foot will trend slightly higher. These projections indicate a combined downside of around 6% for ARO stock.

We estimate that Aeropostale stores constitute 78% of the $55 Trefis price estimate for Aeropostale’s stock, and hence the stock is quite sensitive to (1) Aeropostale Stores EBITDA Margin and (2) Aeropostale Revenue per Square Foot. Below are charts showing recent estimates created by Trefis members for the two drivers in detail.

1. Aeropostale Stores EBITDA Margin

The average of forecasts for Aeropostale Stores EBITDA Margin created by Trefis members indicate a flat forecast of around 18.9% from 2010 to the end of the Trefis forecast period, compared to the baseline Trefis estimate of an increase from 19.7% in 2010 to 21.8% by the end of the Trefis forecast period. The member estimates imply a downside of 9% to the Trefis price estimate for Aeropostale’s stock. In the past, Aeropostale Stores EBITDA Margin has increased from 10.4% in 2005 to 19% in 2009.

You can drag the forecast trend-line above to express your own view, and see the sensitivity of Aeropostale’s stock to Aeropostale Stores EBITDA Margin.

2. Aeropostale Revenue per Square Foot

The average of forecasts for Aeropostale Revenue per Square Foot created by Trefis members indicated a projected increase from $662 in 2010 to $727 by the end of the Trefis forecast period, compared to the baseline Trefis estimate of an increase from $637 in 2010 to $702 by the end of the Trefis forecast period. The member estimates imply an upside of 3% to the Trefis price estimate for Aeropostale’s stock. In the past, Aeropostale Revenue per Square Foot has increased from $526 in 2004 to $624 in 2009.

You can drag the forecast trend-line above to express your own view, and see the sensitivity of Aeropostale’s stock to Aeropostale Revenue per Square Foot.

Disclosure: No positions

Source: Aeropostale: Flat Margins Could Threaten Stock Price